IBM likely to quit Mac OS licensing

Sources close to IBM say the company may soon stop licensing the Mac OS to other firms because there is no longer a reason to do so.

September 11, 19971:35 PM PDT

IBM(IBM) is likely to cease its efforts in sublicensing the Macintosh operating system to other hardware manufacturers, continuing the fallout from Apple Computer's(AAPL) decision to reverse its licensing practice.

Since Apple's buyout of key Power Computing assets and its stated intention to curb the cloning market, IBM believes that there is no longer any reason to continue licensing the Mac OS, sources say. The company will, however, continue to develop PowerPC processors for the platform.

"Our original purpose was to help grow the Mac market. We would do that by supplying processors and OS licenses...With no growth opportunity, why sublicense?" one source asked rhetorically.

With little possibility that Apple will certify any new hardware designs or provide access to the newest version of its operating system, called Mac OS 8, IBM can no longer supply its partners with the components necessary to keep clones competitive with the latest offerings from Apple.

Companies that have already sublicensed the Mac OS from IBM, including Datatech Enterprises and Taiwan-based Tatung, would still be able to sell Mac systems based on current hardware designs and the Mac OS 7.5, an older version of the operating system, sources said.

A spokesperson for IBM declined to comment on the licensing issue. The company did deny reports, however, that it would stop development of the PowerPC chips.

"We fully continue to make and develop processors for Apple. There is a generation of processors being developed beyond what we've already announced," said Pam Olsen, a spokesperson for the company, referring to the recently introduced 350-MHz version of the PowerPC 604e. Olsen also noted that a new 64-bit version of the PowerPC for use in RS/6000 line of computers will be discussed at the upcoming MicroProcessor Forum, a technical conference on semiconductors.

IBM first became a Mac OS licensee in May of 1996. At the time, IBM's presence offered a huge boost in credibility to the Mac platform, but the company never produced its own Mac clones, and recently the company came under criticism from Apple for not moving more aggressively with its own licensing program back in the
days when Apple was hoping that clone vendors could grow the market beyond "cannibalization" of Apple's market share.

In a recent press conference, Apple CFO Fred Anderson said IBM "really hasn't gotten their [licensing] program off the launching pad in a significant way yet."

IBM's likely abandonment of efforts to license the Mac OS marks the latest in a string of developments brought about principally by board member Steve Jobs.

Motorola will announce later today that it will cease development of its Mac clones (see related story) because it couldn't come to terms with Apple on licensing the Mac OS 8.

Earlier this month, Apple purchased Power Computing's "key assets" in a stock deal worth $100 million. Apple essentially bought back the license to the Mac OS and will no longer sell Mac systems after December 31, 1997.

Apple's management has come to believe that it was giving up more money in lost sales than it could ever make from licensing fees. To restore Apple's financial health, the company has moved to severely limit licensing. Only one major company, Umax, will continue to make Mac compatible systems.